Performance Report of My High Dividend Stocks
What a fantastic time of year to receive my next installment of truly passive income. By chance, my next series of payments from dividend-paying stocks is scheduled for December. Who couldn’t use a little extra cash right before Christmas when the bills start piling up?
On the left are the results from my third batch of quarterly dividend payments for Quarter 4 (Q4).
The fourth quarter brought some surprises. Eaton (ETN) made a comeback, surpassing my initial purchase price. Unfortunately, Chevron (CVX) dropped significantly from $120 to $105, though it did rebound. Johnson and Johnson (JNJ) remains strong, well above my initial purchase price. McDonald’s (MCD) is still the biggest laggard of the group.
Overall, the combination of capital gains and partial dividend income has netted a positive return!
In January, I plan to simplify my stock selection process by using the Dogs of the Dow strategy for buying high-dividend stocks. To recap, this strategy involves investing in high-quality stocks with higher dividend yields. The idea is that higher yields indicate undervaluation, potentially leading to price increases as investors flock to these attractive dividends. This concept is well explained in Kelley Wright’s book, “Dividends Still Don’t Lie.”
Moving forward, I’m contemplating whether to invest in the top 10 “Dogs” or the top 5 “Small Dogs.” Historically, the Small Dogs have outperformed the regular Dogs by 1.7% annually, although this might also mean higher price fluctuations. Since I don’t need the money immediately and have years to invest, this risk-return trade-off might be acceptable.
My goal over the next three years is to increase my dividend income to $100 per month, translating to $300 per quarter or $1,200 annually. This would require a portfolio of over $30,000 in dividend-paying stocks, assuming a 4% yield. Given my income structure, I expect to make a substantial contribution towards this goal in January.
Additionally, I’m considering whether to buy high-dividend taxable stocks or to max out our tax-sheltered 403b retirement plan. I believe this will help us structure our assets to achieve early retirement much sooner.
If everything goes as planned, I aim to increase my dividend income from $100 to $1,000 per month eventually!
